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SUPREME COURT
Manila
DECISION
BRION, J.:
This is a petition for review on certiorari1 that seeks to set aside the Court of Appeals (CA)
Decision2 dated October 16, 2001 and Resolution3 dated May 29, 2002 in CA-G.R. SP. No.
64701. These CA rulings affirmed the July 26, 20004 and March 7, 20015 orders of the Regional
Trial Court (RTC), Misamis Oriental, Cagayan de Oro City, denying petitioner Roger V.
Navarro’s (Navarro) motion to dismiss.
BACKGROUND FACTS
On September 12, 1998, respondent Karen T. Go filed two complaints, docketed as Civil Case
Nos. 98-599 (first complaint)6 and 98-598 (second complaint),7 before the RTC for replevin
and/or sum of money with damages against Navarro. In these complaints, Karen Go prayed that
the RTC issue writs of replevin for the seizure of two (2) motor vehicles in Navarro’s possession.
2. That KARGO ENTERPRISES is in the business of, among others, buying and selling
motor vehicles, including hauling trucks and other heavy equipment;
3. That for the cause of action against defendant ROGER NAVARRO, it is hereby stated
that on August 8, 1997, the said defendant leased [from] plaintiff a certain motor vehicle
which is more particularly described as follows –
4. That the aforedescribed motor vehicle has not been the subject of any tax assessment and/or
fine pursuant to law, or seized under an execution or an attachment as against herein plaintiff;
xxx
8. That plaintiff hereby respectfully applies for an order of the Honorable Court for the
immediate delivery of the above-described motor vehicle from defendants unto plaintiff pending
the final determination of this case on the merits and, for that purpose, there is attached hereto an
affidavit duly executed and bond double the value of the personal property subject matter hereof
to answer for damages and costs which defendants may suffer in the event that the order for
replevin prayed for may be found out to having not been properly issued.
The second complaint contained essentially the same allegations as the first complaint, except
that the Lease Agreement with Option to Purchase involved is dated October 1, 1997 and the
motor vehicle leased is described as follows:
The second complaint also alleged that Navarro delivered three post-dated checks, each for the
amount of P100,000.00, to Karen Go in payment of the agreed rentals; however, the third check
was dishonored when presented for payment.8
On October 12, 19989 and October 14, 1998,10 the RTC issued writs of replevin for both cases;
as a result, the Sheriff seized the two vehicles and delivered them to the possession of Karen Go.
In his Answers, Navarro alleged as a special affirmative defense that the two complaints stated
no cause of action, since Karen Go was not a party to the Lease Agreements with Option to
Purchase (collectively, the lease agreements) – the actionable documents on which the
complaints were based.
On Navarro’s motion, both cases were duly consolidated on December 13, 1999.
In its May 8, 2000 order, the RTC dismissed the case on the ground that the complaints did not
state a cause of action.
In response to the motion for reconsideration Karen Go filed dated May 26, 2000,11 the RTC
issued another order dated July 26, 2000 setting aside the order of dismissal. Acting on the
presumption that Glenn Go’s leasing business is a conjugal property, the RTC held that Karen
Go had sufficient interest in his leasing business to file the action against Navarro. However, the
RTC held that Karen Go should have included her husband, Glenn Go, in the complaint based on
Section 4, Rule 3 of the Rules of Court (Rules).12 Thus, the lower court ordered Karen Go to file
a motion for the inclusion of Glenn Go as co-plaintiff.1avvphi1
When the RTC denied Navarro’s motion for reconsideration on March 7, 2001, Navarro filed a
petition for certiorari with the CA, essentially contending that the RTC committed grave abuse of
discretion when it reconsidered the dismissal of the case and directed Karen Go to amend her
complaints by including her husband Glenn Go as co-plaintiff. According to Navarro, a
complaint which failed to state a cause of action could not be converted into one with a cause of
action by mere amendment or supplemental pleading.
On October 16, 2001, the CA denied Navarro’s petition and affirmed the RTC’s order.13 The CA
also denied Navarro’s motion for reconsideration in its resolution of May 29, 2002,14 leading to
the filing of the present petition.
THE PETITION
Navarro alleges that even if the lease agreements were in the name of Kargo Enterprises, since it
did not have the requisite juridical personality to sue, the actual parties to the agreement are
himself and Glenn Go. Since it was Karen Go who filed the complaints and not Glenn Go, she
was not a real party-in-interest and the complaints failed to state a cause of action.
Navarro posits that the RTC erred when it ordered the amendment of the complaint to include
Glenn Go as a co-plaintiff, instead of dismissing the complaint outright because a complaint
which does not state a cause of action cannot be converted into one with a cause of action by a
mere amendment or a supplemental pleading. In effect, the lower court created a cause of action
for Karen Go when there was none at the time she filed the complaints.
Even worse, according to Navarro, the inclusion of Glenn Go as co-plaintiff drastically changed
the theory of the complaints, to his great prejudice. Navarro claims that the lower court gravely
abused its discretion when it assumed that the leased vehicles are part of the conjugal property of
Glenn and Karen Go. Since Karen Go is the registered owner of Kargo Enterprises, the vehicles
subject of the complaint are her paraphernal properties and the RTC gravely erred when it
ordered the inclusion of Glenn Go as a co-plaintiff.
Navarro likewise faults the lower court for setting the trial of the case in the same order that
required Karen Go to amend her complaints, claiming that by issuing this order, the trial court
violated Rule 10 of the Rules.
Even assuming the complaints stated a cause of action against him, Navarro maintains that the
complaints were premature because no prior demand was made on him to comply with the
provisions of the lease agreements before the complaints for replevin were filed.
Lastly, Navarro posits that since the two writs of replevin were issued based on flawed
complaints, the vehicles were illegally seized from his possession and should be returned to him
immediately.
Karen Go, on the other hand, claims that it is misleading for Navarro to state that she has no real
interest in the subject of the complaint, even if the lease agreements were signed only by her
husband, Glenn Go; she is the owner of Kargo Enterprises and Glenn Go signed the lease
agreements merely as the manager of Kargo Enterprises. Moreover, Karen Go maintains that
Navarro’s insistence that Kargo Enterprises is Karen Go’s paraphernal property is without basis.
Based on the law and jurisprudence on the matter, all property acquired during the marriage is
presumed to be conjugal property. Finally, Karen Go insists that her complaints sufficiently
established a cause of action against Navarro. Thus, when the RTC ordered her to include her
husband as co-plaintiff, this was merely to comply with the rule that spouses should sue jointly,
and was not meant to cure the complaints’ lack of cause of action.
Interestingly, although Navarro admits that Karen Go is the registered owner of the business
name Kargo Enterprises, he still insists that Karen Go is not a real party-in-interest in the case.
According to Navarro, while the lease contracts were in Kargo Enterprises’ name, this was
merely a trade name without a juridical personality, so the actual parties to the lease agreements
were Navarro and Glenn Go, to the exclusion of Karen Go.
As a corollary, Navarro contends that the RTC acted with grave abuse of discretion when it
ordered the inclusion of Glenn Go as co-plaintiff, since this in effect created a cause of action for
the complaints when in truth, there was none.
The central factor in appreciating the issues presented in this case is the business name Kargo
Enterprises. The name appears in the title of the Complaint where the plaintiff was identified as
"KAREN T. GO doing business under the name KARGO ENTERPRISES," and this
identification was repeated in the first paragraph of the Complaint. Paragraph 2 defined the
business KARGO ENTERPRISES undertakes. Paragraph 3 continued with the allegation that the
defendant "leased from plaintiff a certain motor vehicle" that was thereafter described.
Significantly, the Complaint specifies and attaches as its integral part the Lease Agreement that
underlies the transaction between the plaintiff and the defendant. Again, the name KARGO
ENTERPRISES entered the picture as this Lease Agreement provides:
GLENN O. GO, of legal age, married, with post office address at xxx, herein referred to as the
LESSOR-SELLER; representing KARGO ENTERPRISES as its Manager,
xxx
As Navarro correctly points out, Kargo Enterprises is a sole proprietorship, which is neither a
natural person, nor a juridical person, as defined by Article 44 of the Civil Code:
(3) Corporations, partnerships and associations for private interest or purpose to which
the law grants a juridical personality, separate and distinct from that of each shareholder,
partner or member.
Thus, pursuant to Section 1, Rule 3 of the Rules,16 Kargo Enterprises cannot be a party to a civil
action. This legal reality leads to the question: who then is the proper party to file an action based
on a contract in the name of Kargo Enterprises?
Finally, there is no law authorizing sole proprietorships like petitioner to bring suit in court. The
law merely recognizes the existence of a sole proprietorship as a form of business organization
conducted for profit by a single individual, and requires the proprietor or owner thereof to secure
licenses and permits, register the business name, and pay taxes to the national government. It
does not vest juridical or legal personality upon the sole proprietorship nor empower it to file or
defend an action in court.
Thus, the complaint in the court below should have been filed in the name of the owner of
Juasing Hardware. The allegation in the body of the complaint would show that the suit is
brought by such person as proprietor or owner of the business conducted under the name and
style Juasing Hardware. The descriptive words "doing business as Juasing Hardware" may be
added to the title of the case, as is customarily done.18 [Emphasis supplied.]
This conclusion should be read in relation with Section 2, Rule 3 of the Rules, which states:
SEC. 2. Parties in interest. – A real party in interest is the party who stands to be benefited or
injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise
authorized by law or these Rules, every action must be prosecuted or defended in the name of the
real party in interest.
As the registered owner of Kargo Enterprises, Karen Go is the party who will directly benefit
from or be injured by a judgment in this case. Thus, contrary to Navarro’s contention, Karen Go
is the real party-in-interest, and it is legally incorrect to say that her Complaint does not state a
cause of action because her name did not appear in the Lease Agreement that her husband signed
in behalf of Kargo Enterprises. Whether Glenn Go can legally sign the Lease Agreement in his
capacity as a manager of Kargo Enterprises, a sole proprietorship, is a question we do not decide,
as this is a matter for the trial court to consider in a trial on the merits.
We find it significant that the business name Kargo Enterprises is in the name of Karen T. Go,19
who described herself in the Complaints to be "a Filipino, of legal age, married to GLENN O.
GO, a resident of Cagayan de Oro City, and doing business under the trade name KARGO
ENTERPRISES."20 That Glenn Go and Karen Go are married to each other is a fact never
brought in issue in the case. Thus, the business name KARGO ENTERPRISES is registered in
the name of a married woman, a fact material to the side issue of whether Kargo Enterprises and
its properties are paraphernal or conjugal properties. To restate the parties’ positions, Navarro
alleges that Kargo Enterprises is Karen Go’s paraphernal property, emphasizing the fact that the
business is registered solely in Karen Go’s name. On the other hand, Karen Go contends that
while the business is registered in her name, it is in fact part of their conjugal property.
The registration of the trade name in the name of one person – a woman – does not necessarily
lead to the conclusion that the trade name as a property is hers alone, particularly when the
woman is married. By law, all property acquired during the marriage, whether the acquisition
appears to have been made, contracted or registered in the name of one or both spouses, is
presumed to be conjugal unless the contrary is proved.21 Our examination of the records of the
case does not show any proof that Kargo Enterprises and the properties or contracts in its name
are conjugal. If at all, only the bare allegation of Navarro to this effect exists in the records of the
case. As we emphasized in Castro v. Miat:22
Petitioners also overlook Article 160 of the New Civil Code. It provides that "all property of the
marriage is presumed to be conjugal partnership, unless it be prove[n] that it pertains exclusively
to the husband or to the wife." This article does not require proof that the property was
acquired with funds of the partnership. The presumption applies even when the manner in
which the property was acquired does not appear.23 [Emphasis supplied.]
Thus, for purposes solely of this case and of resolving the issue of whether Kargo Enterprises as
a sole proprietorship is conjugal or paraphernal property, we hold that it is conjugal property.
Article 124 of the Family Code, on the administration of the conjugal property, provides:
Art. 124. The administration and enjoyment of the conjugal partnership property shall
belong to both spouses jointly. In case of disagreement, the husband’s decision shall prevail,
subject to recourse to the court by the wife for proper remedy, which must be availed of within
five years from the date of the contract implementing such decision.
xxx
This provision, by its terms, allows either Karen or Glenn Go to speak and act with authority in
managing their conjugal property, i.e., Kargo Enterprises. No need exists, therefore, for one to
obtain the consent of the other before performing an act of administration or any act that does not
dispose of or encumber their conjugal property.
Under Article 108 of the Family Code, the conjugal partnership is governed by the rules on the
contract of partnership in all that is not in conflict with what is expressly determined in this
Chapter or by the spouses in their marriage settlements. In other words, the property relations of
the husband and wife shall be governed primarily by Chapter 4 on Conjugal Partnership of Gains
of the Family Code and, suppletorily, by the spouses’ marriage settlement and by the rules on
partnership under the Civil Code. In the absence of any evidence of a marriage settlement
between the spouses Go, we look at the Civil Code provision on partnership for guidance.
A rule on partnership applicable to the spouses’ circumstances is Article 1811 of the Civil Code,
which states:
Art. 1811. A partner is a co-owner with the other partners of specific partnership property.
(1) A partner, subject to the provisions of this Title and to any agreement between the partners,
has an equal right with his partners to possess specific partnership property for partnership
purposes; xxx
Under this provision, Glenn and Karen Go are effectively co-owners of Kargo Enterprises and
the properties registered under this name; hence, both have an equal right to seek possession of
these properties. Applying Article 484 of the Civil Code, which states that "in default of
contracts, or special provisions, co-ownership shall be governed by the provisions of this Title,"
we find further support in Article 487 of the Civil Code that allows any of the co-owners to bring
an action in ejectment with respect to the co-owned property.
While ejectment is normally associated with actions involving real property, we find that this
rule can be applied to the circumstances of the present case, following our ruling in Carandang v.
Heirs of De Guzman.24 In this case, one spouse filed an action for the recovery of credit, a
personal property considered conjugal property, without including the other spouse in the action.
In resolving the issue of whether the other spouse was required to be included as a co-plaintiff in
the action for the recovery of the credit, we said:
Milagros de Guzman, being presumed to be a co-owner of the credits allegedly extended to the
spouses Carandang, seems to be either an indispensable or a necessary party. If she is an
indispensable party, dismissal would be proper. If she is merely a necessary party, dismissal is
not warranted, whether or not there was an order for her inclusion in the complaint pursuant to
Section 9, Rule 3.
Art. 108. The conjugal partnership shall be governed by the rules on the contract of partnership
in all that is not in conflict with what is expressly determined in this Chapter or by the spouses in
their marriage settlements.
This provision is practically the same as the Civil Code provision it superseded:
Art. 147. The conjugal partnership shall be governed by the rules on the contract of partnership
in all that is not in conflict with what is expressly determined in this Chapter.
In this connection, Article 1811 of the Civil Code provides that "[a] partner is a co-owner with
the other partners of specific partnership property." Taken with the presumption of the conjugal
nature of the funds used to finance the four checks used to pay for petitioners’ stock
subscriptions, and with the presumption that the credits themselves are part of conjugal funds,
Article 1811 makes Quirino and Milagros de Guzman co-owners of the alleged credit.
Being co-owners of the alleged credit, Quirino and Milagros de Guzman may separately bring an
action for the recovery thereof. In the fairly recent cases of Baloloy v. Hular and Adlawan v.
Adlawan, we held that, in a co-ownership, co-owners may bring actions for the recovery of co-
owned property without the necessity of joining all the other co-owners as co-plaintiffs because
the suit is presumed to have been filed for the benefit of his co-owners. In the latter case and in
that of De Guia v. Court of Appeals, we also held that Article 487 of the Civil Code, which
provides that any of the co-owners may bring an action for ejectment, covers all kinds of action
for the recovery of possession.
In sum, in suits to recover properties, all co-owners are real parties in interest. However,
pursuant to Article 487 of the Civil Code and relevant jurisprudence, any one of them may bring
an action, any kind of action, for the recovery of co-owned properties. Therefore, only one of the
co-owners, namely the co-owner who filed the suit for the recovery of the co-owned property, is
an indispensable party thereto. The other co-owners are not indispensable parties. They are not
even necessary parties, for a complete relief can be accorded in the suit even without their
participation, since the suit is presumed to have been filed for the benefit of all co-owners.25
[Emphasis supplied.]
Under this ruling, either of the spouses Go may bring an action against Navarro to recover
possession of the Kargo Enterprises-leased vehicles which they co-own. This conclusion is
consistent with Article 124 of the Family Code, supporting as it does the position that either
spouse may act on behalf of the conjugal partnership, so long as they do not dispose of or
encumber the property in question without the other spouse’s consent.
On this basis, we hold that since Glenn Go is not strictly an indispensable party in the action to
recover possession of the leased vehicles, he only needs to be impleaded as a pro-forma party to
the suit, based on Section 4, Rule 4 of the Rules, which states:
Section 4. Spouses as parties. – Husband and wife shall sue or be sued jointly, except as provided
by law.
Even assuming that Glenn Go is an indispensable party to the action, we have held in a number
of cases26 that the misjoinder or non-joinder of indispensable parties in a complaint is not a
ground for dismissal of action. As we stated in Macababbad v. Masirag:27
Rule 3, Section 11 of the Rules of Court provides that neither misjoinder nor nonjoinder of
parties is a ground for the dismissal of an action, thus:
Sec. 11. Misjoinder and non-joinder of parties. Neither misjoinder nor non-joinder of parties is
ground for dismissal of an action. Parties may be dropped or added by order of the court on
motion of any party or on its own initiative at any stage of the action and on such terms as are
just. Any claim against a misjoined party may be severed and proceeded with separately.
In Domingo v. Scheer, this Court held that the proper remedy when a party is left out is to
implead the indispensable party at any stage of the action. The court, either motu proprio or upon
the motion of a party, may order the inclusion of the indispensable party or give the plaintiff
opportunity to amend his complaint in order to include indispensable parties. If the plaintiff to
whom the order to include the indispensable party is directed refuses to comply with the order of
the court, the complaint may be dismissed upon motion of the defendant or upon the court's own
motion. Only upon unjustified failure or refusal to obey the order to include or to amend is the
action dismissed.
In these lights, the RTC Order of July 26, 2000 requiring plaintiff Karen Go to join her husband
as a party plaintiff is fully in order.
In arguing that prior demand is required before an action for a writ of replevin is filed, Navarro
apparently likens a replevin action to an unlawful detainer.
For a writ of replevin to issue, all that the applicant must do is to file an affidavit and bond,
pursuant to Section 2, Rule 60 of the Rules, which states:
The applicant must show by his own affidavit or that of some other person who personally
knows the facts:
(a) That the applicant is the owner of the property claimed, particularly describing it,
or is entitled to the possession thereof;
(b) That the property is wrongfully detained by the adverse party, alleging the cause of
detention thereof according to the best of his knowledge, information, and belief;
(c) That the property has not been distrained or taken for a tax assessment or a fine
pursuant to law, or seized under a writ of execution or preliminary attachment, or
otherwise placed under custodia legis, or if so seized, that it is exempt from such seizure
or custody; and
The applicant must also give a bond, executed to the adverse party in double the value of the
property as stated in the affidavit aforementioned, for the return of the property to the adverse
party if such return be adjudged, and for the payment to the adverse party of such sum as he may
recover from the applicant in the action.
We see nothing in these provisions which requires the applicant to make a prior demand on the
possessor of the property before he can file an action for a writ of replevin. Thus, prior demand is
not a condition precedent to an action for a writ of replevin.
More importantly, Navarro is no longer in the position to claim that a prior demand is necessary,
as he has already admitted in his Answers that he had received the letters that Karen Go sent
him, demanding that he either pay his unpaid obligations or return the leased motor vehicles.
Navarro’s position that a demand is necessary and has not been made is therefore totally
unmeritorious.
WHEREFORE, premises considered, we DENY the petition for review for lack of merit. Costs
against petitioner Roger V. Navarro.
SO ORDERED.
ARTURO D. BRION
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
TERESITA J. LEONARDO-DE
MARIANO C. DEL CASTILLO
CASTRO
Associate Justice
Associate Justice
ROBERTO A. ABAD
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s
Attestation, it is hereby certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
Footnotes
1
Under Rule 45 of the 1997 Revised Rules of Civil Procedure; rollo, pp. 11-46.
2
Penned by Associate Justice Eliezer R. De Los Santos, with the concurrence of
Associate Justice Godardo A. Jacinto and Associate Justice Bernardo P. Abesamis (all
retired); id. at 48-53.
3
Id. at 55.
4
Id. at 105-107.
5
Id. at 108-109.
6
Id. at 129-140.
7
Id. at 143-154.
8
Philippine Bank of Communications – Cagayan de Oro Branch Check No. 017020
dated January 1, 1998.
9
Rollo, p. 155.
10
Id. at 156.
11
Id. at 179-181.
12
Section 4. Spouses as parties. – Husband and wife shall sue or be sued jointly, except
as provided by law.
13
Supra note 2.
14
Supra note 3.
15
RULES OF COURT, Rule 3, Sec. 2.
16
Sec. 1. Who may be parties. – Only natural or juridical persons or entities authorized
by law may be parties in a civil action.
17
201 Phil. 369, 372-373 (1982).
18
Id. at 372-373.
19
Rollo, p. 185.
20
Id. at 129 and 143.
21
FAMILY CODE, Article 116; CIVIL CODE, Article 160.
22
445 Phil. 284, 293 (2003).
23
Id. at 293.
24
G.R. No. 160347, November 29, 2006, 508 SCRA 469.
25
Id. at 486-488.
26
Domingo v. Scheer, 466 Phil. 235 (2004); Vesagas, et al. v. Court of Appeals, et al.,
422 Phil. 860 (2001); Salvador, et al. v. Court of Appeals, et al., 313 Phil. 36 (1995);
Cuyugan v. Dizon, 79 Phil. 80 (1947); Alonso v. Villamor, 16 Phil. 315 (1910).
27
G.R. No. 161237, January 14, 2009.